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Latin America: A Hotbed of IT Services

IT outsourcing of infrastructure and BPO is big business near and below the equator. It's so hot that a major Asian player-Tata Consultancy Services-has a burgeoning presence.

With all the talk of double-dip recessions and global downturns spreading across European and American markets, there are still pockets of the world where business is expanding with plenty of assistance from IT service companies, namely in Latin America.

Despite some slowdown in 2009 in specific countries, IT infrastructure outsourcing services in Latin America grew 11.3 percent in 2009 and are doing well in 2010, according to a study by research analyst Frost & Sullivan.

"For large enterprises, Latin America is a mature market in IT services," said Fernando Belfort, market analyst with Frost & Sullivan, in a phone interview with eWEEK. "In terms of industries, the financial, manufacturing and telecommunications markets are the most mature adopters of IT services. Yet, many opportunities in health care and retail are emerging for local, American and foreign-based outsourcers. These are green industries as health care becomes more digitally advanced and the emergence of an expanding consumer base across Latin American countries draws retailers into consumer financing."

This financing is causing many retailers to address government finance regulations-much of which is done digitally-and is an investment suited well to technology outsourcers in hosting, storage, security, disaster recovery, software services and business process outsourcing-as well as in call center services. The range of competition is wide and includes familiar vendors of the enterprise like IBM, Accenture, HP, SAP, Oracle and Microsoft, but also well-established local companies like Brasil Telecom, Stefanini, Ci&T, Tivit, Sonda, Chile IT and Asian outsourcers like Tata Consultancy Services (TCS), who are well-known for offshore outsourcing stateside.

Further reading

India-based TCS has more than 7,500 local employees in Latin America and is expanding its presence across Mexico, Brazil, Colombia, Uruguay, Argentina and, most recently, Peru. In a phone interview, Latin America CEO for TCS Henry Manzano told eWEEK that TCS expects to be at nearly 10,000 employees in the region by the end of the year.

"We have very close relations with the universities and technical institutions of the area," said Manzano, a 20-year veteran of the BPO industry in Latin America who led the TCS acquisition of Chile's Comricom in 2005. "We spend a lot of effort training technical people from these schools of higher education, with 97 percent of our staff being local workers in Latin America. We do this to ease the language barriers needed for local clients, but also to contend with time zone issues."

Frost & Sullivan analysts confirmed the expansion of TCS in the region, saying they were the most aggressive of the Asian outsourcers to make a splash in Latin America and are strong in BPO, business continuity, software and application development, and maintenance services.

"We see two types of customers in Latin America," said Manzano. "First, those who are already here and want to be more efficient-we bring all our offers and solutions and supplement their operations-and also U.S. companies who are using India as their center of operations, but have time zone issues to manage, so Latin America offers some backup service for Western hemisphere issues."

The two largest countries of presence for TCS are Brazil and Mexico, but it has BPO centers in Uruguay and Chile, as well as local delivery centers with labs opening up across the region. Infosys does have a small presence in the region.

"Some companies want to work with strong global brand that may be mature, but also have a local presence and market experience," said Belfort. "There are other benefits like tax incentives that are drawing foreign companies to the area."

Argentina has a strong collection of universities and plenty of affordable local workers, Belfort stated. Major drivers for business in Brazil are the 2014 World Cup and 2016 Olympics happening in Rio de Janeiro. Companies are expanding hotel chains, retail, housing and construction-and IT services play a vital role in the success of these endeavors.

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